IMF loan delayed by debate over austerity deal

Published on 12/12/2012 00:00

A VITAL $4.8 billion (£3bn) International Monetary Fund loan to Egypt will be delayed until next month, intensifying the crisis gripping the Arab world’s most populous nation.

Finance minister Mumtaz al-Said yesterday said the delay was intended to allow time to explain a package of economic austerity measures to the Egyptian people. But the announcement came after President Mohammed Morsi on Monday backed down on planned tax increases, seen as key for the loan to go ahead. Opposition groups had attacked the tax package, which had included duties on alcoholic drinks, cigarettes and a range of goods and services.

“Of course the delay will have some economic impact, but we are discussing necessary measures [to address that] during the coming period,” the minister said, adding: “I am optimistic…everything will be well, God willing.”

The turmoil has placed a big strain on the economy, sending foreign currency reserves down to about $15bn, less than half what they were before the revolt two years ago which led to the ousting of Hosni Mubarak.